Inflation under pressure, IPCA back above target and slowing activity – Economic Analysis (October 2026)

We present the October edition of RADAR 4i. The global economic landscape remains shaped by the conflict in the Middle East, which keeps oil prices at elevated levels, with direct impacts on global and Brazilian inflation, amid slowing activity and high electoral uncertainty in Brazil.

International Outlook: Inflation and Monetary Policy

• Oil and Global Inflation: The Middle East conflict has kept oil above $100 per barrel since mid-September. In the US, CPI rose 3.7% YoY in September and the PCE deflator 3.4% in August; in the Euro Area, harmonized CPI accelerated to 3.7%.
• Monetary Policy: Inflation is moving further away from the Fed’s and ECB’s 2% target. Monetary tightening is expected to continue in both regions, with two additional US rate hikes by March next year.

Brazil Scenario: Inflation, Deceleration, and Politics

• Inflation Above Target: The IPCA rose 0.82% in September (4.58% over 12 months), moving back above the BCB’s target ceiling, driven mainly by Housing (end of the Itaipu electricity bonus), as well as Transportation and Food (oil and El Niño). Inflation is projected at 5.19% by year-end, yet the Selic is expected to keep falling to 13.25% by end-2026.
• Economic Activity: In August, industrial output fell 0.6% MoM (-1.2% YoY), while retail (+0.1%) and services (-0.1%) were broadly stable, held back by restrictive interest rates and high household debt burdens.
• IBC-Br: The index rose 0.3% MoM (+1.2% YoY) in August after two consecutive declines, without changing the view of a moderate slowdown in activity.
• Elections: In the first round on Oct. 4, Flávio Bolsonaro received 47.03% of valid votes versus 45.16% for Lula. 4intelligence’s poll aggregator shows him ahead 49% to 47%, but the race remains a statistical tie; markets await the runoff for signals on fiscal adjustment proposals.

Download the Full Report (PDF)

Access the detailed technical analysis, activity data, and full projections. The full report is available for download in both English and Portuguese via the links below: